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HUBBELL INC (HUBB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered adjusted EPS of $3.50 versus S&P Global consensus of $3.72*, and revenue of $1.365B versus $1.394B*, as tariffs/raw material inflation and Grid Automation softness pressured margins; sequential revenue rose ~2% and GAAP EPS was $3.15 .
  • Management maintained 2025 adjusted EPS guidance ($17.35–$17.85) and lowered GAAP EPS guidance slightly to $15.95–$16.45 while raising total/organic sales growth to 6–8% from 4–5% previously, citing pricing actions to offset cost inflation .
  • Electrical Solutions posted 5% organic growth on data center strength and continued margin expansion; Grid Infrastructure returned to organic growth with double-digit order increases, while Grid Automation declined ~15% on tough comps .
  • A key stock narrative: tariff/LIFO timing headwinds now but management expects to neutralize ~$135M cost impact via price/productivity in 2025, with a cautionary $0.50 sensitivity on the full-year EPS range if reciprocal tariffs lag mitigation under LIFO .

What Went Well and What Went Wrong

What Went Well

  • Electrical Solutions organic growth of 5% on data center demand, with adjusted operating margin up 70 bps Y/Y; “our strategy to compete collectively… driving outgrowth in key vertical markets, most notably evidenced by strong data center growth” .
  • Grid Infrastructure returned to organic growth with double-digit order increases across transmission, substation, distribution and telecom; “grid infrastructure orders were up double digits year-over-year… order trends were strong across each end market” .
  • Consolidated GAAP operating margin improved 120 bps Y/Y to 17.5% and Utility Solutions GAAP margin rose 110 bps to 18.7% despite inflation/tariffs, reflecting price/productivity and lower amortization .

What Went Wrong

  • Grid Automation sales declined ~15% Y/Y on tough prior-year comps; utility meters softer than internal expectations, now backfilled by smaller projects/MRO .
  • Price/cost/productivity headwind of ~$10M in Q1 under LIFO timing; Q2 expected ~$20M incremental headwind before mitigation fully offsets in 2H25 .
  • Free cash flow fell to $11.4M versus $51.9M in Q1 2024 as working capital built and capex/repurchases rose; cash from operations was $37.4M versus $92.2M Y/Y .

Financial Results

Consolidated Performance (sequential and Y/Y)

MetricQ3 2024Q4 2024Q1 2025
Net Sales ($USD Billions)$1.443 $1.334 $1.365
Diluted EPS (GAAP) ($)$4.05 $3.64 $3.15
Adjusted Diluted EPS ($)$4.49 $4.10 $3.50
Operating Margin (%)21.1% 19.3% 17.5%
Adjusted Operating Margin (%)23.2% 21.8% 19.3%

Actual vs Wall Street Consensus (S&P Global)

MetricQ1 2025 ActualQ1 2025 Consensus*# of Estimates*
Adjusted EPS ($)$3.50 3.72*13*
Revenue ($USD Billions)$1.365 1.394*10*

Values retrieved from S&P Global.*

Segment Breakdown

Segment MetricQ1 2024Q4 2024Q1 2025
Utility Solutions Net Sales ($MM)$894.0 $847.1 $857.1
Utility Solutions GAAP Operating Margin (%)17.6% 19.6% 18.7%
Utility Solutions Adjusted Operating Margin (%)21.8% 22.9% 21.0%
Electrical Solutions Net Sales ($MM)$505.1 $487.2 $508.1
Electrical Solutions GAAP Operating Margin (%)14.1% 19.0% 15.5%
Electrical Solutions Adjusted Operating Margin (%)15.8% 20.0% 16.5%

KPIs and Cash Flow

KPIQ1 2024Q1 2025
Net Cash from Operating Activities ($MM)$92.2 $37.4
Capex ($MM)$40.3 $26.0
Free Cash Flow ($MM)$51.9 $11.4
Share Repurchases ($MM)$10.0 $125.0

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
GAAP Diluted EPSFY 2025$16.00–$16.50 $15.95–$16.45 Lowered (slightly)
Adjusted Diluted EPSFY 2025$17.35–$17.85 $17.35–$17.85 Maintained
Total Sales GrowthFY 20254–5% 6–8% Raised
Organic Sales GrowthFY 20254–5% 6–8% Raised
Adjusted Tax RateFY 202522.0–22.5% 22.0–22.5% Maintained
Restructuring & Related InvestmentFY 2025~$20MM ~$20MM Maintained
FCF Conversion (on adjusted NI)FY 2025≥90% ≥90% Maintained
Dividend (Quarterly)Current—$1.32/share (paid June 16, 2025) Announced (regular)

Earnings Call Themes & Trends

TopicQ3 2024 (Prev)Q4 2024 (Prev)Q1 2025 (Current)Trend
Tariffs & Cost InflationNotable acquisition-driven margin expansion; macro headwinds noted Margin expansion; tariff risk flagged prospectively Tariff/raw material inflation created ~$10MM Q1 drag; plan to neutralize ~$135MM via price/productivity; $0.50 LIFO sensitivity Headwind peaking 1H25; mitigation ramping 2H25
Grid InfrastructureStrong T&D/substation; grid automation up slightly T&D strong; Grid Automation down ~11% Grid Infrastructure returned to organic growth; orders up double digits across end markets Improving demand trajectory
Grid AutomationUp ~4% on tough comps Down ~11% Down ~15% Y/Y; sequential stabilization via smaller projects/MRO Stabilizing off lower base
Electrical Solutions/Data CentersOrganic +3%; margin expansion Portfolio/mix drove margins; divestiture impact Organic +5%; data centers largest contributor; margin up 70 bps Strengthening with vertical strategy
Orders & DestockingTelecom/Distribution weak; normalization ongoing Destocking a headwind in distribution Destocking largely behind; sequential orders solid; broad-based order strength Cleaned up; orders accelerating
Capital DeploymentFCF strength; acquisitions embedded FCF $364MM Q4; active M&A pipeline ~$600MM buyback authorization; $125MM Q1 repurchases; active M&A pipeline Balanced M&A and buybacks

Management Commentary

  • CEO opening: “Electrical Solutions organic growth of 5% was driven by strength in datacenter markets… Grid Infrastructure [had] a return to organic growth… while Grid Automation sales were down double digits… recent cost increases driven by raw material inflation and tariffs resulted in a net price/cost/productivity headwind” .
  • CFO on LIFO/tariffs: “We are recognizing these cost increases as they happen… absent this $10 million drag, you would have seen margins expand nicely… we’re going to be offsetting that drag in the second half of the year” .
  • CFO on tariff mitigation: “We will neutralize that $135 million impact within calendar year 2025… reciprocal tariffs… targeting neutral… possible it takes until the first quarter of next year” .
  • CEO on utility budgets: “Multiyear capital plans from… top investor-owned utility customers have revised upwards by approximately 10%… T&D markets are at the early stages of a long-term investment cycle” .

Q&A Highlights

  • Guidance sensitivity: Management outlined a $0.50 LIFO-related sensitivity around the EPS range; they target neutralization but flagged timing risk under reciprocal tariffs .
  • Q2 setup: Sequential top-line is seasonally strong; expect ~$20MM LIFO drag in Q2 (after ~$10MM in Q1), before price/productivity offsets in 2H .
  • Price elasticity/surcharging: Broad pricing actions for commodity inflation showed low elasticity; for China-focused tariffs, targeted actions plus supply chain shifts; preference for price increases over surcharges .
  • Destocking: Utility distribution destocking largely behind; orders up double digits across T&D/telecom SKUs .
  • Grid Automation outlook: Softer than initially expected, now stabilizing on smaller projects/MRO; embedded in full-year guide .

Estimates Context

  • Q1 2025 outcomes versus S&P Global consensus: Adjusted EPS $3.50 vs $3.72* (miss), revenue $1.365B vs $1.394B* (miss) .
  • FY 2025 consensus (context): EPS 18.20* vs company’s adjusted EPS guidance $17.35–$17.85; revenue 5.84B* vs company sales growth 6–8% (pricing plus volume) .
  • Estimate revisions likely: Tariff/LIFO timing suggests near-term margin pressure before 2H offset; stronger order momentum in Grid Infrastructure and data centers supports revenue trajectory; consensus may trend toward company’s adjusted EPS range as mitigation actions stick .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term margin pressure from tariffs/LIFO is transitory; management plans to neutralize via price/productivity with a disclosed $0.50 EPS sensitivity if timing slips—watch Q2 gross/operating margin prints for inflection signals .
  • Demand backdrop is constructive: Grid Infrastructure orders up double digits and utility budgets revised ~10% higher; Electrical Solutions levered to data center build-out with ongoing margin expansion .
  • Guidance quality: Adjusted EPS maintained, GAAP EPS trimmed modestly; importantly, total/organic sales growth raised to 6–8% reflecting price realization—an incremental positive for top-line trajectory .
  • Cash discipline with flexibility: FCF conversion target ≥90% affirmed; Q1 buybacks of $125MM and ~$600MM authorization support capital returns while M&A pipeline remains active .
  • Segment watch: Monitor Grid Automation stabilization and Electrical Solutions’ data center cadence; sequential improvement in distribution points to cleaner 2H volume .
  • Trading setup: Q2 may show LIFO/tariff cost recognition before full price offsets; look for commentary on realized price stick rates and reciprocal tariff mitigation—stock likely reacts to margin trajectory and demand orders .
  • Medium-term thesis: Secular tailwinds (grid modernization/electrification; data centers/megasites) plus structural operating model and portfolio actions position HUBB for differentiated earnings compounding beyond 2025 .